Challenge to Philadelphia Pay History Ordinance Dismissed, But Ordinance’s Future Remains In Doubt

By David J. Woolf

Last week, District Court Judge Mitchell Goldberg granted the City of Philadelphia’s Motion to Dismiss the Philadelphia Chamber of Commerce’s lawsuit challenging Philadelphia’s controversial new pay history ordinance. As we have discussed previously (see Here’s What that New Philadelphia ‘Pay History’ Law Means for Your Business and Philadelphia Wage Equity Ordinance On Hold … For Now), the ordinance would make it unlawful for an employer to inquire about a job applicant’s pay history and would severely restrict an employer’s ability to base a new hire’s initial pay on his or her compensation history. The ordinance had been scheduled to go into effect on May 23, but was stayed by Judge Goldberg, with agreement of the City, pending resolution of the City’s motion to dismiss the Chamber’s lawsuit challenging the ordinance.

Judge Goldberg’s decision is likely not the last word however, as it did not address the merits of the ordinance. Rather, the Court held that the Chamber, because of the way the lawsuit was worded, did not have standing to challenge the ordinance, and it gave the Chamber until June 13, 2017 to file an amended complaint to cure those deficiencies. The Chamber is now expected to do just that.

In the meantime, the question is whether and, if so when, Philadelphia employers need to start complying with the ordinance. Despite the fact that Judge Goldberg’s decision, in dismissing the Chamber’s lawsuit, arguably lifted the stay, the City announced the following position through a spokesperson:

If the chamber files an amended complaint that cures the standing defects identified by the court, the city will adhere to its agreement not to enforce the order until the chamber’s motion for preliminary injunction is resolved. If no amended complaint is filed within the period stipulated by the court, the city will begin taking steps to enforce the ordinance….

Given this statement, we believe that the best approach is for Philadelphia employers to continue to prepare to comply with the ordinance, but to hold off on implementation until we see what the Chamber does between now and June 13. If, as expected, the Chamber files an amended complaint, we will be back to playing the waiting game for a little while longer.

We will continue to provide updates as developments occur.

Bill Strengthens Enforcement Powers of Philadelphia Commission on Human Relations

By Matthew A. Fontana

Philadelphia is poised to strengthen the enforcement powers of the Philadelphia Commission on Human Relations (“PCHR”), the City’s primary civil rights and anti-discrimination agency.  Under legislation that passed City Council on May 8, 2017, the PCHR would have the authority to issue cease and desist orders—closing a business’s operations for an unspecified length of time—if the agency determines the business has engaged in “severe or repeated violations” of the Philadelphia Fair Practices Ordinance (“the Ordinance”).  The authority to shut down a business’s operation is an unheard of remedy for employment related civil rights violation and—given the significant ramification for employers— it is critical for Philadelphia employers to be aware of the potential consequences of the PCHR’s enhanced powers for  their business operations

The Ordinance prohibits discrimination based on age, ancestry, color, disability, ethnicity, gender identity, sexual orientation, national origin, race, religion, and sex.  The Ordinance is enforced by the PCHR.  The PCHR’s enforcement powers are limited to traditional remedies for employment discrimination, including back pay, emotional distress damages, punitive damages and orders to eliminate or redraft a policy found to be discriminatory.  Prior to using its enforcement powers, the PCHR encourages parties to mediate their dispute or to reach a voluntary settlement.

In response to concerns about a pattern and practice of racial discrimination at bars and restaurants in the gayborhood—a neighborhood in Philadelphia that derives its name from its historic association with LGBTQ residents—Councilman Derek Green proposed legislation that would strengthen penalties against Philadelphia businesses found to discriminate against their employees, as well as against tenants or customers.  The bill gives the PCHR the authority to order a business to cease operations for an undefined “period of time” when the PCHR has issued a finding that the business has engaged in severe or repeated violations of the Ordinance and the business has refused to resolve the case by mediation or settlement.  While Rue Landau, executive director of the PCHR, provided some solace to employers by stating that “it would only be implemented under egregious circumstances after a full hearing by the PCHR,” he also stated that “[t]he law sends a strong message to business that the City will not tolerate discrimination … .”

The bill, which Philadelphia’s Mayor signaled he will sign into law, certainly sends a strong message.  The authority to shut down the operations of a business as a remedy for employment related civil rights violations is unprecedented.  No other employment civil rights agency has this type of authority.  Given the unique power being vested in the PCHR and its lack of any precedent, it is likely that the measure will be challenged in court.  However, until that happens, Philadelphia businesses need to be aware that a PCHR investigation can lead to serious consequences, particularly if the PCHR believes a pattern of discrimination is present.

The employment lawyers at Drinker Biddle will continue to monitor the implementation of the PCHR’s new cease and desist powers and provide any updates so that you can stay ahead.

 

Philadelphia Wage Equity Ordinance On Hold … For Now

By Alexa E. Miller and David J. Woolf

Earlier this year, Philadelphia became the first city to pass a law prohibiting employers from inquiring about a job applicant’s wage history and restricting their ability to consider wage history in setting new employee compensation. The pay equity ordinance was enacted to halt the perpetuation of gender discrimination in compensation practices.

As has been widely reported, the Philadelphia Chamber of Commerce filed a lawsuit on April 6, 2017 to challenge the ordinance, which was scheduled to go into effect on May 23, 2017. The Chamber also filed a motion for a preliminary injunction, asking the Court to enjoin the enforcement of the ordinance while its lawsuit is pending, on the grounds that the ordinance violates businesses’ free speech rights under the First Amendment and is unconstitutionally vague.  The City of Philadelphia’s apparent first response has been to question whether the Chamber of Commerce even has standing to bring a lawsuit challenging the ordinance.

On April 19, Judge Mitchell Goldberg issued an order temporarily staying the enforcement of the ordinance until he can decide the Chamber’s preliminary injunction motion. Briefing on the standing issue will extend until at least May 12, with the Court’s decision on standing and possibly additional briefing related to the ordinance itself to follow.  Thus, it is unlikely that the ordinance will go into effect on May 23 as originally planned.

Although Philadelphia employers may be tempted to delay implementing changes to their hiring practices, we recommend that they remain alert and ready to comply. Legislation restricting employers’ ability to rely on a job candidate’s wage history in setting compensation is the latest trend in equal pay laws.  We predict that this trend will continue to gain momentum in other cities and states across the country.  Most recently, the New York City Council passed similar legislation amending the New York City Human Rights Law to prohibit employers from inquiring about an applicant’s wage history, which Mayor de Blasio is expected to sign shortly.  Prudent employers should review their hiring practices (e.g., update job applications and train managers about appropriate interview questions) and be prepared to comply with the law if the Chamber’s challenge is unsuccessful.

Additional background about the ordinance is available here.  We will continue to monitor the status of Philadelphia’s wage equity ordinance and update this site as developments occur.